Share certificates may be history after Legco vote on electronic records
Scripless bill to be submitted to lawmakers later this month would bring Hong Kong in line with Britain in adopting electronic ownership records
The government will submit a bill to the Legislative Council this month to allow listed companies to forego issuing share certificates and use electronic records to prove ownership of shares in a firm, an official said yesterday.
Chan Ka-keung, Secretary for Financial Services and the Treasury, said use of electronic records "marks an important step … towards an uncertificated securities market regime which will increase overall market efficiency, improve investor protection and enhance Hong Kong's competitiveness".
Salina Yan Mei-mei, acting permanent secretary of financial services and the treasury bureau, said a scripless market would attract more overseas companies to list here since some overseas markets no longer require companies to issue shares certificates. Hong Kong law still requires companies to issue certificates.
The Securities and Futures and Companies Legislation (Uncertificated Securities Market Amendment) Bill 2014 will be gazetted tomorrow and will be tabled for lawmakers on June 25. The legislators would debate the new law before casting a vote in 2016 or 2017.
Under the proposed law, Hong Kong will follow the British model to allow investors to choose if they want to have a physical certificate or an electronic record. Australia, the mainland and Taiwan have gone scripless and abolished certificates.
At the end of April, there were 7.3 million share certificates kept at the Central Clearing and Settlement System (CCASS) - the clearing arm of the stock exchange. This represents about 30 per cent of all 22.5 million certificates in Hong Kong, with the rest in the hands of investors. In terms of market value, the shares certificates kept at the CCASS are worth HK$13 trillion.